Abstract
With the start of the new millenium, marked by the disruptive power of Internet technologies, it is almost commonly acknowledged that innovative firms grow faster and perform financially better than those who fail to rapidly mobilize their social and financial capital resources to discover newer, more efficient, and ingenious ways of doing business and creating alternative sales venues. Thus, if the term innovation has come to refer to “the process of turning ideas into reality, exploiting windows of opportunities, and capturing value from them” in essence, innovation, then, can be regarded as a beneficial and intrinsically “good” phenomenon. This is true especially for the technology and telecomunications industries according to the Thomson Reuters’ 2015 State of Innovation Report, which were ranked the most innovative industries with 30 % and 13 % of patent filings in 2014, respectively (http://www.businessinsider.com/most-innovative-industries-2015-5). Evidently though, innovation is not a win-win game for all stakeholders as laid out back in the 1930s by the Schumpeterian “creative destruction” concept portraying a “quasi-Darwinian” and rather pessimistic view of a process that serves mainly capitalistic motivations in the forms of securing monopoly profits and eventually eradicating a wide range of industries. Looking back at the past couple of decades, financial innovation has become one of the most far-reaching types of innovations, in terms of both, scope and its prolonged repurcussions. This chapter discusses the concept of financial innovation as a strategically competitive tool.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsNotes
- 1.
Individuals born between 1995 and 2012 according to http://www.socialmarketing.org/newsletter/features/generation3.htm
- 2.
- 3.
See Schilit (2010) for further examples of financial shenanigans.
- 4.
- 5.
- 6.
- 7.
It describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up the market, eventually displacing established competitors.
- 8.
- 9.
- 10.
References
Allen F, Yago G (2010) Financing the future: market-based innovations for growth. Pearson Prentice Hall, Upper Saddle River, NJ
Bacso G, Dietz M, Radnai M (2015, June). Decoding financial-technology innovation. Retrieved from: http://www.mckinsey.com/insights/financial_services/decoding_financial_technology_innovation
Błach J (2011) Financial innovations and their role in the modern financial system-identification and systematization of the problem. e-Finanse. Finan Internet Q 7(3):13–26
Bookstaber R (2007) A demon of our own design. Wiley, Hoboken, NJ
Boz E, Mendoza EG (2014) Financial innovation, the discovery of risk, and the US credit crisis. J Monet Econ 62:1–22, http://dx.doi.org/10.1016/j.jmoneco.2013.07.001
Christensen C (2013) The innovator’s dilemma: when new technologies cause great firms to fail. Harvard Business Review Press, Boston, MA
Cohen B (2015, August 21) CoinMarketCap: ‘About 40% of the coins ever added to the site are now inactive’. Retrieved from: http://cointelegraph.com/news/coinmarketcap-about-40-of-the-coins-ever-added-to-the-site-are-now-inactive
Diaz-Rainey I, Ibikunle G (2012) A taxonomy of the ‘dark side’ of financial innovation: the cases of high frequency trading and exchange traded funds. Int J Entrep Innov Manag 16(1–2):51–72
Forbes (2016) Retrieved from: http://www.forbes.com/sites/chancebarnett/2015/06/09/trends-show-crowdfunding-to-surpass-vc-in-2016/#eecf42b444b5
Frame WS, White LJ (2004) Empirical studies of financial innovation: lots of talk, little action? J Econ Lit 42(1):116–144
Frame WS, White LJ (2014) Technological change, financial innovation, and diffusion in banking. Retrieved from: http://web-docs.stern.nyu.edu/old_web/economics/docs/workingpapers/2014/White_TechnologicalChange_Jan2014.pdf
Godin B (2008) Innovation: the history of a category. Project on the Intellectual History of Innovation Working Paper, 1
Goetzmann WN, Rouwenhorst KG (2005) The origins of value: the financial innovations that created modern capital markets. Oxford University Press, Oxford
Henderson BJ, Pearson ND (2011) The dark side of financial innovation: a case study of the pricing of a retail financial product. J Financ Econ 100(2):227–247
Johnson S, Kwak J (2012) White house burning: the founding fathers, our national debt, and why it matters to you. Vintage
Komlos J (2014) Has creative destruction become more destructive? (No. w20379). National Bureau of Economic Research
Laeven L, Levine R, Michalopoulos S (2015) Financial innovation and endogenous growth. J Financ Intermed 24(1):1–24
Lerner J, Tufano P (2011) The consequences of financial innovation: a counterfactual research agenda (No. w16780). National Bureau of Economic Research
Litan R (2010) In defense of much, but not all, financial innovation. Working Paper, The Brookings Institute. Retrieved from: http://www.brookings.edu/~/media/research/files/papers/2010/2/17-financial-innovation-litan/0217_financial_innovation_litan.pdf
Markowitz H (1952) Portfolio selection. J Financ 7(1):77–91
McKinsey (2015) Retrieved from: http://www.mckinsey.com/insights/economic_studies/debt_and_not_much_deleveraging
Merton RC (1992) Financial innovation and economic performance. J Appl Corp Financ 4(4):12–22
Olyver Wyman (2015) The state of the financial services industry report. Retrieved from: http://www.oliverwyman.com/content/dam/oliver-wyman/global/en/2015/jan/SoFS-2015/State_of_the_Financial_Services_Industry_Report_2015.pdf
Pérez Caldentey E, Vernengo M (2010) Modern finance, methodology and the global crisis (No. 2010-04). Working Paper, University of Utah, Department of Economics
Rossignoli B, Arnaboldi F (2009) Financial innovation: theoretical issues and empirical evidence in Italy and in the UK. Int Rev Econ 56(3):275–301
Salampasis D, Mention AL, Torkkeli M (2014) Open innovation and collaboration in the financial services sector: exploring the role of trust. Int J Bus Innov Res 8(5):466–484
Schilit H (2010) Financial shenanigans. Tata McGraw-Hill Education
Schumpeter JA (1939) Business cycles. McGraw-Hill, New York
Schumpeter J (1942) Creative destruction. Capitalism, socialism and democracy. Harper and Brothers, New York
Skiera B, Bermes M, Horn L (2011) Customer equity sustainability ratio: a new metric for assessing a firm’s future orientation. J Mark 75(3):118–131
Son-Turan S (2015) Stakeholders in equity-based crowdfunding: respective risks over the equity crowdfunding lifecycle. J Financ Innov 1(2):141–151, http://dx.doi.org/10.15194/jofi_2015.v1.i2.34
The Economist (2014) The slumps that shaped modern finance. Retrieved from: http://www.economist.com/news/essays/21600451-finance-not-merely-prone-crises-it-shaped-them-five-historical-crises-show-how-aspects-today-s-fina
Tufano P (2003) Financial innovation. Handb Econ Financ 1:307–335
WEF (2012) Rethinking financial innovation. Retrieved from: http://www3.weforum.org/docs/WEF_FS_RethinkingFinancialInnovation_Report_2012.pdf
White LJ (1996) Technological change, financial innovation, and financial regulation in the US: The challenges for public policy. Available at SSRN: http://ssrn.com/abstract=8072
WSJ (2009, December 14) Paul Volker: think more boldly. Retrieved from: http://www.wsj.com/articles/SB10001424052748704825504574586330960597134
WSJ (2012) Retrieved from: http://blogs.wsj.com/economics/2012/10/01/total-global-losses-from-financial-crisis-15-trillion/
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2017 Springer International Publishing Switzerland
About this chapter
Cite this chapter
Son-Turan, S. (2017). Increasing Strategic Competitiveness Through Innovation: The Finance Perspective. In: Hacioğlu, Ü., Dinçer, H., Alayoğlu, N. (eds) Global Business Strategies in Crisis. Contributions to Management Science. Springer, Cham. https://doi.org/10.1007/978-3-319-44591-5_16
Download citation
DOI: https://doi.org/10.1007/978-3-319-44591-5_16
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-44590-8
Online ISBN: 978-3-319-44591-5
eBook Packages: Business and ManagementBusiness and Management (R0)